Governors Warns of Budget Troubles

Published 8:00 pm, Tuesday, January 22, 2002

Associated Press Writer

Warning that New Jersey faces a dire $2.8 billion budget shortfall, Gov. James E. McGreevey announced that hundreds of state employees would face layoffs.

McGreevey, who took office last week, made the announcement at a town meeting at Montclair State University. He said 600 state workers would receive layoff notices on Wednesday. It wasn't immediately clear whether more notices would follow.

McGreevey's announcement was one of several ominous forecasts this week by governors around the country.

In Missouri, Gov. Bob Holden on Wednesday said he plans to eliminate nearly 700 jobs. Virginia Gov. Mark Warner also warned that state layoffs were possible as he outlined deep spending cuts Tuesday.

New York Gov. George Pataki and Florida Gov. Jeb Bush both called for modest spending increases in their states, partly for security measures.

McGreevey has asked all state agencies to cut spending by 5 percent and warned the state's mayors that they can't count on more state aid.

"They're not getting another red cent, and they're going to have to live within their means," the Democratic governor said Tuesday.

McGreevey and his two top budget aides accused the previous Republican administration of reckless spending, saying the current fiscal year's budget planned for an unrealistic 7 percent increase in revenue.

New Jersey's Constitution requires a balanced budget.

In Virginia, state employees and school teachers will forgo raises, and the state car tax won't be fully phased out until at least 2004 under Warner's plan. The newly elected Democrat said he hopes the moves will help close a $3.5 billion budget gap in the next 21/2 years.

Warner also called for across-the-board agency cuts of 3 percent this year, 7 percent in 2003 and 8 percent in 2004, and he warned that more measures could be taken if the economy deteriorates and state tax receipts slide.

"As we get our reports back from various agencies, there could very well be some personnel cuts," Warner said.

Pataki unveiled an $88.6 billion budget Tuesday that calls for a 1.6 percent spending increase and using surplus funds and job buyouts to help close a $6.8 billion budget gap caused by the terrorist attacks and weak economy.

The New York Republican said $200 million should be set aside to pay for extra security costs related to Sept. 11.

Along with increased spending for education in Florida, Bush called for spending $45 million more to boost domestic security.

"We awoke one morning in September and we confronted a threat that is unprecedented for our generation," the Republican governor said.

In Missouri, Democrat Holden proposed a $19 billion budget, nearly $300,000 smaller than last year's plan. It was the first time in 20 years that a Missouri budget proposal had shrunk from the one approved the previous year. Holden asked for $480 million in cuts from state agencies and said 688 state jobs would be eliminated. He also said state workers would get no raises for a second straight year.

Holden warned that if lawmakers don't approve an unprecedented use of $135 million of state reserve funds, even more cuts will be needed.